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Mexican growers propose higher tomato floor prices

A compromise proposal from Mexican growers to raise the floor price of tomatoes exported to the U.S. is being heralded by some as the best thing for bilateral trade and a positive outcome for consumers and domestic growers.

Representatives for Mexican growers met with Commerce Department officials Oct. 18 and proposed boosting the floor price of imported Mexican tomatoes 18%-25%, depending on tomato variety. They also propose to include all Mexican growers in the 16-year-old trade agreement, which currently covers about 85% of them.

Martin Ley, vice president of Nogales, Ariz.-based Del Campo Supreme Inc., was among the delegation meeting with U.S. officials. He told the New York Times after the meeting that the proposal would prevent prices from “hitting the floor.”

Reggie Brown, executive director of the Florida Tomato Exchange, said Oct. 19 that he didn’t know anything first-hand about the proposal, although he’d seen media reports. However, he said Florida growers believe the trade agreement was fundamentally flawed from the beginning.

“It’s basically a license to dump,” Brown said. “It’s not about free trade, it’s about managed trade and it is managed in favor of the Mexican growers.

“We have no intention of engaging in a negotiative process in the press. We want to restore fair competition in the tomato trade.”

Currently the floor price for Mexican tomatoes coming to the U.S. is about 21 cents per pound from Oct. 23 through June 30 each year. Summer tomatoes from Mexico have a floor price of about 17 cents per pound from July 1 through Oct. 22.

The proposal from the Mexican growers would hike the floor price to more than 25 cents per pound for field tomatoes and 27 cents per pound for greenhouse tomatoes.

“This increase is 6 to 8 times higher than previous increases under the agreement. Previous increases have been around 3%,” said Lance Jungmeyer, president of the Fresh Produce Association of the Americas, Nogales, Ariz.

Jungmeyer said he believes Mexican proposal makes sense from all perspectives.

“This is the best thing for bilateral trade and U.S.-Mexico relations overall,” Jungmeyer said Oct. 19.

“Consumers will not be impacted at the supermarket level or in restaurants,” he said. “This is because Mexican tomatoes are always sold above the reference, or floor, price. By increasing the floor price, the proposal increases the level of protection for the domestic U.S. industry and helps ensure supplies from a broad range of growing regions.”

The protection for U.S. growers included in the Mexican proposal has a strong enforcement mechanism, Jungmeyer said, because it would cover 100% of Mexican growers instead of only 85% of them.

“There will be enforcement activities on both sides of the border to ensure compliance,” Jungmeyer said.

The Florida growers’ challenge of the tomato agreement spurred talk of a trade war, with some U.S. produce exporters fearful of Mexican retaliatory tariffs similar to those imposed when the U.S. failed to meet cross-border trucking provisions of the North American Free Trade Agreement.

After the Commerce Department announced a preliminary decision to end the tomato trade agreement on Sept. 27, Mexico’s ambassador to the U.S., Arturo Sarukhan, referenced the retaliatory tariffs that were up to 45% on some products.

“Mexico will respond: you should ask those who were in the Mexican crosshairs over the trucking dispute. When Mexico aims, Mexico hits the target,” Sarukhan said in an e-mail to U.S. media.

The Commerce Department has until May 2013 to reach a final decision on the request from the Florida growers.

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About the Author:

Coral Beach, Staff Writer

Coral Beach joined The Packer newsroom in February 2011, bringing more than 30 years of experience at daily newspapers, trade magazines and online publications. Beach earned a bachelor’s of science degree from the University of Kansas School of Journalism in 1982.
e-mail: cbeach@thepacker.com
phone: 913-438-0781